Exhibit 10.27
STEPHEN PUDLES
STOCK OPTION
AGREEMENT
API NANOTRONICS CORP.
2006 EQUITY INCENTIVE
PLAN
THIS AGREEMENT is dated and made
effective as of April 22, 2008 (“ Effective Date
”) by and between API NANOTRONICS CORP., a Delaware
corporation (the “ Company ”), and Stephen
Pudles (“ Optionee ”).
WITNESSETH:
WHEREAS, Optionee became an employee
of the Company on the date hereof; and
WHEREAS, the employment agreement
(the “ Employment Agreement ”) dated
March 3, 2008 between the Company and the Optionee
requires that the Company grant him the options set forth herein as
soon as practicable;
WHEREAS, the Company desires to
grant stock options to Optionee on the Effective Date to purchase
shares of the Company’s Common Stock pursuant to the
Company’s 2006 Equity Incentive Plan, as amended (the “
Plan ”); and
WHEREAS, the Board of Directors of
the Company and its Compensation Committee has authorized the grant
of stock options to Optionee and has determined that the Fair
Market Value of Common Stock of the Company on the Effective Date
shall be the exercise price per share provided below.
NOW, THEREFORE, in consideration of
the premises and of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Grant of Option .
The Company hereby grants to Optionee as of the Effective Date the
right and option (the “ Incentive Option ”) to
purchase up to 11,236,650 shares of Common Stock (“ Time
Based Shares ”) and the right and option (the “
Nonqualified Option ” and collectively with the
Incentive Option, the “ Option ”) to purchase up
to 7,491,100 shares of Common Stock (the “ Performance
Shares ” and collectively, with the Time Based Shares,
the “ Shares ”) at an exercise price of $0.0925
per Share on the terms and conditions set forth herein and subject
to the terms and conditions of the Plan. The Incentive Option is
intended to qualify as an “incentive stock option”
within the meaning of Section 422, or any successor provision,
of the Internal Revenue Code of 1986, as amended (the “
Code ”), and the regulations thereunder subject to the
limitations set forth in Section 9(b) of the Plan. The
Nonqualified Option is not intended to qualify as an
“incentive stock option” under Section 422 of the
Code.
All capitalized terms not defined in
this Agreement shall have the meaning set forth in the
Plan.
2. Duration and
Exercisability .
a. Vesting/Exercise Period of
Incentive Option . The Incentive Option shall become
exercisable as to portions of the Time Based Shares as follows:
(i) the Incentive Option shall not be exercisable with respect
to any of the Time Based Shares until the first anniversary of the
Effective Date; (ii) on such first anniversary of the
Effective Date the Incentive Option shall become exercisable as to
thirty-three and one-third percent (33-1/3%) of the Time Based
Shares; (iii) on the second anniversary of the Effective Date,
the Incentive Option shall become exercisable as to an additional
thirty-three and one-third percent (33-1/3%) of the Time Based
Shares; and (iv) on the third anniversary of the Effective
Date, the Incentive Option shall become exercisable as to an
additional thirty-three and one-third percent (33-1/3%) of the Time
Based Shares; subject to the Optionee’s continuous employment
with the Company through the vesting date. The Time Based Shares
that may be treated as subject to purchase pursuant to an
“incentive stock option” within the meaning of
Section 422 of the Code in any given year shall be limited to
conform to the $100,000 limit set forth at Section 9.1(b) of
the Plan and Section 422 of the Code.
b. Vesting/Exercise Period of
Nonqualified Option . The Nonqualified Option with respect to
the Performance Shares will vest in three equal annual installments
tied to the next three fiscal year ends of the Company as specified
below but only if the specified performance targets for the
applicable fiscal year are achieved. Such performance targets shall
be based upon EBITDA targets and other performance targets
(collectively, the “ Performance Targets ”)
determined by the Board in consultation with Optionee. The
Performance Targets for the Nonqualified Option with respect to
(i) the first one-third (1/3) of the Performance Shares
shall be determined within 120 days of March 3, 2008,
(ii) the second one-third (1/3) of the Performance Shares
shall be determined no later than 30 days prior to the
Company’s May 2009 fiscal year end and (iii) the third
and final one-third (1/3) of the Performance Shares shall be
determined no later than 30 days prior to the Company’s May
2010 fiscal year end. The Performance Shares will vest in three
equal annual installments 60 days after the end of each of the
first three fiscal years, starting with the fiscal year commencing
June 1, 2008, subject to (i) achievement of the
Performance Targets for the applicable fiscal year and
(ii) Optionee’s continuous employment with the Company
through the vesting date.
c. Change of Control . If a
Change in Control occurs during the term of Optionee’s
employment with the Company, the Option, to the extent that it has
not already become exercisable, will immediately become exercisable
with respect to 50% of the Time Based Shares and 50% of the
Performance Shares with respect to which the Option is not then
exercisable.
d. Expiration . The Option
shall expire on the tenth anniversary of the Effective Date
(“ Expiration Date ”) and must be exercised, if
at all, on or before the earlier of the Expiration Date and any
date on which the Option terminates in accordance with the
provisions of Section 3.
2
e. Lapse Upon Expiration . To
the extent that this Option is not exercised prior to the
applicable expiration date set forth in Section 2(d) or
Section 3 of this Agreement, all rights of Optionee under this
Option shall thereupon be forfeited.
3. Termination
.
a. Termination for Any Reason
Other than Death or Disability . If Optionee is Terminated for
any reason other than his death or Disability (as such term is
hereafter defined), this Option shall be exercisable only to the
extent the Option was exercisable on the date of Termination, but
had not previously been exercised, and shall expire on the earlier
of (i) the close of business three months after the
Termination Date (as hereafter defined) and (ii) the
Expiration Date. Notwithstanding the foregoing, if the Optionee is
terminated for Cause, then the Option shall terminate immediately
on the Optionee’s Termination Date.
b. Termination Because of Death
or Disability . If Optionee is Terminated because of his death
or his Disability (or Optionee dies within three (3) months
after a Termination other than because of his Disability or because
of the existence of Cause), then this Option shall be exercisable
by Optionee, or the person or persons to whom Optionee’s
rights under this Option shall have passed by Optionee’s will
or by the laws of descent and distribution, only to the extent the
Option was exercisable on the date of Optionee’s Termination,
but had not previously been exercised, and shall expire on the
earlier of: (i) the close of business six months after
Optionee’s Termination Date and (ii) the Expiration
Date.
c. Change of Control . In the
case of a Change of Control, the terms of the Option may be
modified by the Committee as provided in the Plan.
d. Definitions .
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